Non-Durable Consumption and Housing Net Worth in the Great Recession: Evidence from Easily Accessible Data

23 Pages Posted: 9 May 2016

See all articles by Greg Kaplan

Greg Kaplan

University of Pennsylvania

Kurt Mitman

IIES

Giovanni L. Violante

New York University, Department of Economics; Centre for Economic Policy Research (CEPR)

Date Written: May 2016

Abstract

In an influential paper, Mian, Rao and Sufi (2013) exploit geographic variation in housing supply elasticities to measure the effect of changes in the housing share of net worth on total household expenditures during the Great Recession. Their widely-cited estimates are based on proprietary house price data, and use new vehicle registrations as the main proxy for total spending. We revisit their study using different, publicly available data on house prices, and an easily-accessible proxy for expenditures in non-durable goods. We re-affirm their findings in our data, and refine their analysis in several dimensions: (i) we separate the roles of falling house prices and initial leverage; (ii) we distinguish the effects on real consumption versus nominal expenditures; and (iii) we infer the implied elasticity of total non-durable expenditures in goods and services to housing net worth.

Keywords: Consumption, great recession, House Prices, Non-durable expenditures

JEL Classification: E21, E32, R21

Suggested Citation

Kaplan, Greg and Mitman, Kurt and Violante, Giovanni L., Non-Durable Consumption and Housing Net Worth in the Great Recession: Evidence from Easily Accessible Data (May 2016). CEPR Discussion Paper No. DP11255. Available at SSRN: https://ssrn.com/abstract=2777542

Greg Kaplan (Contact Author)

University of Pennsylvania ( email )

Philadelphia, PA 19104
United States

Kurt Mitman

IIES ( email )

Stockholm, SE-10691
Sweden

HOME PAGE: http://kurtmitman.com

Giovanni L. Violante

New York University, Department of Economics ( email )

269 Mercer Street
New York, NY 10003
United States
212-992-9771 (Phone)
212-995-4186 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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